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1 - 10 of 13 (3.17 seconds)Section 260A in The Income Tax Act, 1961 [Entire Act]
Tuticorin Alkali Chemicals And ... vs Commissioner Of Income Tax, Madras on 8 July, 1997
In this case, we are not concerned with the question whether the expenditure was on capital account or on revenue account as in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. (supra). In this case, we are concerned with ascertainment of true profits/value of the Asset and, therefore, the method of accounting followed by the assessee becomes relevant. Therefore, there is no merit in the argument advanced on behalf of the assessee that good accounting is not necessarily good law.
Cit vs Gujarat Mineral Development ... on 30 September, 1997
He relied upon the judgment of the Gujarat High Court in the case of CIT v. Gujarat Mineral Development Corpn. [1981] 132 ITR 377, [1980] 4 Taxman 526.
Mafatlal Fine Spg. And Mfg. Co. Ltd. vs Commissioner Of Income-Tax on 1 October, 1993
He submitted that in the present case the liability accrued in the first year and, therefore, as held by the Supreme Court in the case of Mysore Spg. & Mfg. Co. Ltd. v. CIT [1966] 61 ITR 572, the assessee was entitled to full deduction in the first year and, therefore, the question of co-relating the expenditure to income/benefit for five years does not arise.
Commissioner Of Income-Tax vs Bibhuti Bhusan Mallick. on 27 January, 1986
In this case, he relied upon the judgment in the case of CIT v. Sri Bibhuti Bhusan Dutt [1963] 48 ITR 233 (Cal). Mr. Dastur contended that deduction under the Income-tax Act does not depend on the status of the assessee nor does it depend on the profit/loss of the assessee.
Hindustan Aluminium Corporation Ltd. vs Commissioner Of Income-Tax (Central) ... on 9 March, 1988
He relied upon the judgment of the Calcutta High Court in the case of Hindustan Aluminium Corpn. Ltd. v. CIT [1985] 144 ITR 474, [1982] 11 Taxman 129. He contended that in the present case under the terms of Issue, two options were given to the Lenders. That, in the first option, there was payment of interest every six months and the same was the case under the second option. He, therefore, contended that amortization principle was applicable to both the options. He, therefore, contended that even Rs. 55 was payable by way of interest for five years. However, the same was paid in the first year by the assessee and, therefore, the Assessing Officer was right in coming to the conclusion that the principle of amortization was applicable to the facts of this case.
The Keshav Mills Co. Ltd vs Commissioner Of Income-Tax, Bombay ... on 8 February, 1965
22. The Mercantile System of Accounting is based on accrual. Basically, it is a Double Entry System of accounting. Under the Mercantile System of Accounting, profits arising or accruing at the date of the transaction are liable to be taxed notwithstanding the fact that they are not actually received or deemed to be received under the Act. Under the Mercantile System of Accounting, therefore, book profits are liable to be taxed. The profits earned and credited in the books of account constitute the basis of computation of income. The system postulates the existence of tax insofar as monies due and payable by the parties to whom they are debited-Keshav Mills Ltd. v. CIT . Therefore, under the Mercantile System of Accounting, in order to determine the net income of an accounting year, the revenue and other incomes are matched with the cost of resources consumed [expenses]. Under the Mercantile System of Accounting, this Matching is required to be done on accrual basis. Under this Matching concept, revenue and income earned during an Accounting Period, irrespective of actual cash in-flow, is required to be compared with expenses incurred during the same period, irrespective of actual out-flow of cash. In this case, the assessee is following Mercantile System of Accounting. This Matching concept is very relevant to compute taxable income particularly in cases involving DRE. It has been recognised by numerous judgments.
Messrs. Calcutta Company Ltd vs The Commissioner Of Income-Tax,West ... on 12 May, 1959
In the case of Calcutta Co. Ltd. v. CIT the facts were as follows: The assessee bought lands and sold them in plots. When the plots were sold the purchasers paid only a portion of the purchase price and undertook to pay the balance in instalments. The assessee, in turn, agreed to develop the plots within six months. In the relevant Accounting Year, the assessee actually received only Rs. 29,392 towards sale price of the lands, but, in accordance with the Mercantile System of Accounting followed by the assessee, it credited in its accounts Rs. 43,692 representing the full sale price of the lands. At the same time, it also debited Rs. 24,809 as expenditure for the development it had undertaken even though, no part of that amount was actually spent. The Department, therefore, disallowed the expenditure of Rs. 24,809 on the ground that the amount was not actually spent. The assessee ultimately succeeded in the Supreme Court. It was held by the Supreme Court that the expression "Profits or Gains" in Section 10(1) of the Income-tax Act, 1922 should be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure, which is necessary for the purposes of earning the receipts is deducted therefrom. Accordingly, the Supreme Court took the view, that since the assessee was following Mercantile System of Accounting and since the assessee had credited the full sale price of lands in its accounts amounting to Rs. 43,692, the assessee was entitled to estimate the expenditure because, without such estimation of expenditure, it was not possible to compute profits and gains.
The Commissioner Of Income-Tax, Madras vs A. Krishnaswami Mudaliar And Others on 16 April, 1964
This judgment of the Supreme Court in A. Krishnaswami Mudaliar's case (supra) also lays down the difference between Cash and Mercantile System of Accountings. It also invokes Matching concept. In this judgment, it has been held that when goods are sold on credit and the assessee follows Mercantile System of Accounting, a receipt entry is posted as on the date of sale although no cash is actually received on that day and a debit entry is posted when liability is incurred although payment on account of such liability is not made. That, in appropriate cases, the Assessing Officer may have to make appropriate variations where the system adopted by the assessee does not indicate the profits. The Supreme Court has further laid down that according to Mercantile System of Accounting, actual cash received during the year and actual cash outlay are treated in the same way as under the Cash System of accounting but, to the balance thus arising, there is added an amount of outstanding not collected at the end of the year and from which the liabilities incurred or accrued have got to be discharged at the end of the year.